A limited constitutional government calls for a rules-based, freemarket monetary system, not the topsy-turvy fiat dollar that now exists under central banking. This issue of the Cato Journal examines the case for alternatives to central banking and the reforms needed to move toward free-market money.

The more widespread use of body cameras will make it easier for the American public to better understand how police officers do their jobs and under what circumstances they feel that it is necessary to resort to deadly force.

Americans are finally enjoying an improving economy after years of recession and slow growth. The unemployment rate is dropping, the economy is expanding, and public confidence is rising. Surely our economic crisis is behind us. Or is it? In Going for Broke: Deficits, Debt, and the Entitlement Crisis, Cato scholar Michael D. Tanner examines the growing national debt and its dire implications for our future and explains why a looming financial meltdown may be far worse than anyone expects.

The Cato Institute has released its 2014 Annual Report, which documents a dynamic year of growth and productivity. “Libertarianism is not just a framework for utopia,” Cato’s David Boaz writes in his book, The Libertarian Mind. “It is the indispensable framework for the future.” And as the new report demonstrates, the Cato Institute, thanks largely to the generosity of our Sponsors, is leading the charge to apply this framework across the policy spectrum.

Will Republicans Make a Principled Stand Against Ex-Im Reauthorization in 2014?

Such is the essence of the marketing pitch of the U.S. Export-Import Bank, whose officials have begun ramping up their lobbying efforts ahead of a 2014 vote concerning reauthorization of the Bank’s charter, which expires in September. Last go around, in 2012, Ex-Im ran into some unexpected turbulence when free-market think tanks, government watchdog groups, and limited government Republicans in Congress raised some compelling – but ultimately ignored – objections to reauthorization.

The ostensible purpose of the Ex-Im Bank is to assist in financing the export of U.S. goods and services to international markets. Even if that were a legitimate role of government, the public must keep a watchful eye on how much and to whom loans are made – especially given the current administration’s tendency to bet big on particular industries and specific firms, and in light of its commitment to seeing U.S. exports reach $3.14 trillion in 2014.

From the U.S. Export-Import Bank’s 2013 Annual Report:

The Ex-Im Bank’s mission is to support American jobs by facilitating the export of U.S. goods and services. The Bank provides competitive export financing and ensures a level playing field for U.S. exporters competing for sales in the global marketplace. Ex-Im Bank does not compete with private-sector lenders but provides export financing that fill gaps in trade financing. The Bank assumes credit and country risks that the private sector is unable or unwilling to accept. It also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters. The Bank’s charter requires that the transactions it authorizes demonstrate reasonable assurance of repayment.

The defensive tone of this mission statement anticipates Ex-Im critics’ objections, but it certainly doesn’t answer them. The objectives of filling gaps in trade financing passed over by the private sector and expecting a reasonable assurance of repayment are mutually exclusive – unless the threshold for “reasonable assurance” is more risk-permissive than the private-sector’s most risk-permissive financing entities. Therefore, Ex-Im is either putting taxpayer resources at risk or it is competing directly with private-sector lenders for customers in need of finance. And if the latter, then as it seeks to create the proverbial “level playing field” for the U.S. companies whose customers it finances, Ex-Im is un-leveling the playing field for the finance industry, as well as for the U.S. firms in industries that compete globally with these U.S-taxpayer financed foreign companies.

The Bank does more harm than good. It assists some – mostly large, politically savvy, deep-pocketed – U.S. companies at the expense of others. When U.S. taxpayers provide the financing for foreign companies’ purchases from U.S. companies, they are subsidizing the foreign competitors of downstream U.S. companies. This is analogous to the tariff-rate quotas of the U.S. sugar program, to give one example, which benefit cane and beet producers and refiners, but put U.S. sugar-using firms in the food processing, bakery, and confectionary industries at disadvantages vis-à-vis their foreign competitors, who have access to cheaper sugar. It is an exercise in picking winners and losers with the winners being those firms and industries with the most effective K Street operations.

Delta Airlines objected and even went to court on the grounds that Ex-Im’s financing of Air India’s purchase of 30 Boeing aircraft subsidized its foreign competition. Likewise, Cliffs Natural Resources, a mining company that operates three iron ore mines in Minnesota and one in Michigan, continues to object to Ex-Im’s $694 million financing of an Australian iron mine’s purchases of U.S.-made bulldozers and trucks from Caterpillar, locomotives from General Electric and drilling rigs from Copco. According to the Duluth News Tribune, “[t]he Roy Hill project in Australia’s outback is so big and so remote that entire new cities, ocean ports, roads, an airport and a 220-mile railroad are being built for a single mine that annually will produce 55 million tons - more iron ore than all U.S. mines combined. The project is owned by billionaire Gina Rinehart, the richest person in Australia.”

Leaving the question of why U.S. taxpayers should be subsidizing purchases of Australia’s richest person aside, iron ore extracted from Australian mines competes with U.S. iron ore for customers in the steel industry. In that regard, the Roy Hill project financing benefits some U.S. equipment manufacturers at the expense of U.S. mining interests and U.S. steel producers, whose Asian competitors get cheaper raw materials. This imbalance, this picking of winners and losers, this battle in the political arena that should be occurring in the marketplace will persist as long as the Ex-Im Bank is open for business.

The validity of these and many other objections notwithstanding, after several months of debate and deliberation in 2012, Republican leadership in Congress not only caved to establishment pressure to reauthorize the Bank’s charter, but also upped its annual allowance by 40 percent to $140 billion. One “rebellious” Republican who voted against reauthorization in 2012 is Jeb Hensarling, who now chairs the House Financial Services Committee, which will consider the reauthorization bill this session. The Ex-Im reauthorization debate and vote will provide Hensarling and other Republicans the opportunity to distinguish free-market capitalism from the crony variety that has given capitalism a bad name.

In this Washington Examiner column from last week, Tim Carney suggests that by opposing reauthorization of the Ex-Im bank, the GOP can make the 2014 elections a referendum on corporate welfare. Let’s hope he’s right.

As this issue is likely to become topical in the weeks and months ahead, following is a list of papers, op-eds, and blog posts written by Cato scholars (mostly by Sallie James, who has moved on to new endeavors) over the years.